The Australian National Audit Office has identified the advantages of activity based budgeting: The Advantages - Output costs are supported by a schedule of costed activities - Opportunities to examine work processes - Identifies non value-adding activities that can be eliminated - Basis of a performance measurement system and direct link between strategic goals and operational realities - Enables cost profiles to be managed - Accurate costing data for operational management - Costs are transparent, understandable and actionable Disadvantages - Activity definition may become too detailed and the model may become too complex and difficult to maintain - Underestimation of the task of collecting activity driver data - Implementation may be considered a financial management fad and there is insufficient commitment from operational managers Activity Based Budgeting Disadvantages - Usually requires buying Activity Based Budgeting software - Requires training of all managers including budgeting department - Requires people to really understand what drives their budget - Eliminates excuse that activity volume changed because it makes visible volume changes - Requires everyone to collect or estimate activity volume By understanding how resources are transformed into products or services, and byfocusing on the cost of activities, activity based budgeting helps an organisation to obtain a greaterunderstanding of how costs behave in their organization and which activities create significant amounts of cost. Budgeting also permits you to identify those factors that are key to the success of the organization. These factors can be closely monitored throughout the year and adjustments can be made for critical elements. A budget can help you. Business budgeting helps focus your thoughts and actions in the direction in which you are headed. Food must be scrumptious for your guests to enjoy and the venue or the reception area must look good when photographed. Indoor weddings must have at least a spot where guests and the couples could be photographed. Don't waste your wedding budget with reception areas that only offers dining area; choose those that offers their lobby or some parts of the establishment that have an elegant and stylish backdrop. If a member of the family might get sick or the money you expected to receive is delayed, you will have an emergency fall back plan. Resist the temptation to splurge. One problem that stops you from budgeting money is the tendency to buy on impulse. Think of the bills that come on a monthly basis that needs to be paid. This way, you do not need to pay extra for your household helpers, and at the same time, you learn how to do household chores on your own. Budgeting tips can sure do miracles for those who are overly dependent on their maids. Clothes need not be branded. You do not go out for other people to check the tag on your shirt. To streamline the budgeting process and ensure more timely and accurate budgets, companies place great value on a formalized process that produces detailed yet flexible budgets that are fully aligned with the strategic goals of the organization. The budgeting process provides people with the opportunity to carefully match their goals with the resources necessary to accomplish those goals.